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Why Quebec can become the battery of the US Northeast

IN DEPTH | Canadian provincial utility Hydro-Québec is helping to reinvent Big Hydro to meet new demand from the energy transition, writes Darius Snieckus

Meeting the surging renewable energy demand in the densely populated, power-hungry cities of the US Northeast could in some large part be solved by a single company — and it won’t have to even set foot inside the lower 48.

With a 100TWh annual surplus from a 37GW fleet of hydroelectric plants spread across the vast wilderness of Canada’s largest province, utility Hydro-Québec has plenty of power to ratchet-up export of electricity to its neighbour to the south.

The government-owned company, North America’s largest renewables generator, has in each of the past three years pulled in C$800m-900m ($644m-725m) from electricity distributors in New England. And demand — and revenue — is only expected to rise, especially as states such as Massachusetts and New York enshrine hugely ambitious emissions-reduction targets and begin to roll out clean-energy tenders in support.

The first of those saw Massachusetts on 25 January give the nod to Hydro-Québec's 100% hydropower-based Northern Pass project with local utility Eversource for the entire 9.45TWh annually under a landmark clean-energy auction.

For the Massachusetts tender, Hydro-Québec was also part of a front-running bid with Gaz Metro and Boralex to supply hydropower and 300MW of wind from the Seigneurie de Beaupré development near Quebec City into the US state, with the utility providing hydropower to “firm up” the variable wind generation.

At the same time, next door in New York, the New York Power Authority is aiming to contract 1TWh each year, while NYSERDA, the state’s energy R&D body, wants to buy another 1.5TWh annually — collectively the largest clean-energy procurement in US history and designed to move New York towards its 50% renewables goal for 2030.

In New York, Hydro-Québec has put forward two options: the first sees it exporting 700GWh a year using upgraded existing transmission infrastructure; the second has the utility linking with several US transmission developers to build a series of new power trunklines able to transport up to 8.3TWh into New York each year — several times more than the state is looking for in its current procurement round, and a big slice of what it will need to meet its renewables target.

“There is no question we can be the battery of the [US] Northeast — our [hydroelectric] dams are full of water, [and] we have major new transmission projects under development,” says Hydro-Québec president of distribution David Murray. “And, while for a long time we weren’t really recognised much outside of Canada — chiefly due to pricing misperceptions — we are getting much more visibility [in the US] now and that attracts possibilities for us.

“Our reputation as a low-price, green source of power is only becoming better and better in the eyes of these states’ governments.”

Quebec trio submit wind/hydro bid to supply Massachusetts

New hydro capacity continues to be built in Quebec to keep pace with the upswing in demand in the province and for export to the US, underpinned by the utility’s 1.55GW La Romaine complex, a four-stage project being constructed on the north shore of the St Lawrence River at a cost of $6.5bn. Once the final generating station is commissioned in 2020, the plant will add 8TWh a year to existing capacity of 176TWh.

“Having this extra capacity is giving us the opportunity to make bids to export more into key markets, such as the US Northeast, which — if we win, of course — would allow us to increase from our current levels by more than 30TWh a year,” says Murray.

Wind’s place in the Hydro-Québec operation has been growing steadily in importance since the first power-purchase agreements (PPAs) were signed in 2003, with 3.7GW contracted since, including most recently, a 25-year deal with US developer Pattern Energy for its 147MW Mont Sainte-Marguerite project in southern Quebec.

“Production of hydroelectricity has been cheap for us but wind has and will continue to be an opportunity for us,” says Murray. “We’ll pass the 4GW mark soon and we continue to develop transmission projects to support the sector’s production to market.

Invenergy, Hydro-Quebec propose clean energy supply to New England

“Wind is something entirely positive for us because it lets us offer a wider range of supply possibilities to customers. Ultimately, it is all about cost, and the cost of wind has come down dramatically.”

Along with the numerous transmission projects under way to expand and shore up the Quebec grid, the utility is eyeing up construction of a series of US-bound export lines including the Quebec-New Hampshire Interconnection Project, an 80km high-voltage direct-current line recently rubber-stamped by government, which, together with the — ultimately successful —Eversource Energy-backed Northern Pass Transmission project, made up one of the three power transmission options put forward by Hydro-Québec for the Massachusetts tender.

Trajectories for ongoing market growth at home and abroad in the US are such that Hydro-Québec has now set 2020 as the deadline to decide on a new round of capacity-building capital spending.

“By then we will have to make the call on the next major investment round based on where we are seeing the energy transition going and its impact on the decentralisation of demand,” says Murray. “We have to consider so many variables — more wind, more decentralised PV, and so on.”

Canadian hydro and wind see Massachusetts opportunity

Along with phase 4 of its giant La Romaine plant adding a further 245MW to the supply portfolio, Murray notes the utility expects to increase the efficiency of its existing fleet to make the equivalent of another 500MW of capacity available to markets old and new.

“For now, we are going to push our surplus — which for the first time in ten years saw a reduction, which is the right trend — but the energy landscape is changing all the time, so it is a matter of always finding and managing the best balance. We are in our own transition.

“Energy efficiency is also an area that has to be factored in: over the last ten years we have managed to find 10TWh of improvements in the network — which is actually the size of output of La Romaine.”

The financials coming in are strong and stable. Bullish Q3 2017 results brought net income for the year to just shy of $2.2bn, as Hydro-Québec rang up 27.1TWh of exports — “among our best third-quarter performances”, Murray adds.

After 75 years, Hydro-Québec is looking out to new and broader horizons — with the aspiration to be a new breed of utility. “We have been builders of many things over our long history — hydroelectric dams, transmission lines, distribution centres. And now we want to be one of the builders of the energy transition in Canada — we have the experience and we have the expertise. We see a huge opportunity ahead in the energy transition,” says Murray.

“Even our ‘green-ness’ we see as an opportunity,” he adds. “[Being hydropower] we are already 99.9% clean-energy, sure, but we are working on the 0.1%.

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Why Quebec can become the battery of the US Northeast

Why Quebec can become the battery of the US Northeast

IN DEPTH | Canadian provincial utility Hydro-Québec is helping to reinvent Big Hydro to meet new demand from the energy transition, writes Darius Snieckus

Meeting the surging renewable energy demand in the densely populated, power-hungry cities of the US Northeast could in some large part be solved by a single company — and it won’t have to even set foot inside the lower 48.

With a 100TWh annual surplus from a 37GW fleet of hydroelectric plants spread across the vast wilderness of Canada’s largest province, utility Hydro-Québec has plenty of power to ratchet-up export of electricity to its neighbour to the south.

The government-owned company, North America’s largest renewables generator, has in each of the past three years pulled in C$800m-900m ($644m-725m) from electricity distributors in New England. And demand — and revenue — is only expected to rise, especially as states such as Massachusetts and New York enshrine hugely ambitious emissions-reduction targets and begin to roll out clean-energy tenders in support.

The first of those saw Massachusetts on 25 January give the nod to Hydro-Québec's 100% hydropower-based Northern Pass project with local utility Eversource for the entire 9.45TWh annually under a landmark clean-energy auction.

For the Massachusetts tender, Hydro-Québec was also part of a front-running bid with Gaz Metro and Boralex to supply hydropower and 300MW of wind from the Seigneurie de Beaupré development near Quebec City into the US state, with the utility providing hydropower to “firm up” the variable wind generation.

At the same time, next door in New York, the New York Power Authority is aiming to contract 1TWh each year, while NYSERDA, the state’s energy R&D body, wants to buy another 1.5TWh annually — collectively the largest clean-energy procurement in US history and designed to move New York towards its 50% renewables goal for 2030.

In New York, Hydro-Québec has put forward two options: the first sees it exporting 700GWh a year using upgraded existing transmission infrastructure; the second has the utility linking with several US transmission developers to build a series of new power trunklines able to transport up to 8.3TWh into New York each year — several times more than the state is looking for in its current procurement round, and a big slice of what it will need to meet its renewables target.

“There is no question we can be the battery of the [US] Northeast — our [hydroelectric] dams are full of water, [and] we have major new transmission projects under development,” says Hydro-Québec president of distribution David Murray. “And, while for a long time we weren’t really recognised much outside of Canada — chiefly due to pricing misperceptions — we are getting much more visibility [in the US] now and that attracts possibilities for us.

“Our reputation as a low-price, green source of power is only becoming better and better in the eyes of these states’ governments.”

Quebec trio submit wind/hydro bid to supply Massachusetts

New hydro capacity continues to be built in Quebec to keep pace with the upswing in demand in the province and for export to the US, underpinned by the utility’s 1.55GW La Romaine complex, a four-stage project being constructed on the north shore of the St Lawrence River at a cost of $6.5bn. Once the final generating station is commissioned in 2020, the plant will add 8TWh a year to existing capacity of 176TWh.

“Having this extra capacity is giving us the opportunity to make bids to export more into key markets, such as the US Northeast, which — if we win, of course — would allow us to increase from our current levels by more than 30TWh a year,” says Murray.

Wind’s place in the Hydro-Québec operation has been growing steadily in importance since the first power-purchase agreements (PPAs) were signed in 2003, with 3.7GW contracted since, including most recently, a 25-year deal with US developer Pattern Energy for its 147MW Mont Sainte-Marguerite project in southern Quebec.

“Production of hydroelectricity has been cheap for us but wind has and will continue to be an opportunity for us,” says Murray. “We’ll pass the 4GW mark soon and we continue to develop transmission projects to support the sector’s production to market.

Invenergy, Hydro-Quebec propose clean energy supply to New England

“Wind is something entirely positive for us because it lets us offer a wider range of supply possibilities to customers. Ultimately, it is all about cost, and the cost of wind has come down dramatically.”

Along with the numerous transmission projects under way to expand and shore up the Quebec grid, the utility is eyeing up construction of a series of US-bound export lines including the Quebec-New Hampshire Interconnection Project, an 80km high-voltage direct-current line recently rubber-stamped by government, which, together with the — ultimately successful —Eversource Energy-backed Northern Pass Transmission project, made up one of the three power transmission options put forward by Hydro-Québec for the Massachusetts tender.

Trajectories for ongoing market growth at home and abroad in the US are such that Hydro-Québec has now set 2020 as the deadline to decide on a new round of capacity-building capital spending.

“By then we will have to make the call on the next major investment round based on where we are seeing the energy transition going and its impact on the decentralisation of demand,” says Murray. “We have to consider so many variables — more wind, more decentralised PV, and so on.”

Canadian hydro and wind see Massachusetts opportunity

Along with phase 4 of its giant La Romaine plant adding a further 245MW to the supply portfolio, Murray notes the utility expects to increase the efficiency of its existing fleet to make the equivalent of another 500MW of capacity available to markets old and new.

“For now, we are going to push our surplus — which for the first time in ten years saw a reduction, which is the right trend — but the energy landscape is changing all the time, so it is a matter of always finding and managing the best balance. We are in our own transition.

“Energy efficiency is also an area that has to be factored in: over the last ten years we have managed to find 10TWh of improvements in the network — which is actually the size of output of La Romaine.”

The financials coming in are strong and stable. Bullish Q3 2017 results brought net income for the year to just shy of $2.2bn, as Hydro-Québec rang up 27.1TWh of exports — “among our best third-quarter performances”, Murray adds.

After 75 years, Hydro-Québec is looking out to new and broader horizons — with the aspiration to be a new breed of utility. “We have been builders of many things over our long history — hydroelectric dams, transmission lines, distribution centres. And now we want to be one of the builders of the energy transition in Canada — we have the experience and we have the expertise. We see a huge opportunity ahead in the energy transition,” says Murray.

“Even our ‘green-ness’ we see as an opportunity,” he adds. “[Being hydropower] we are already 99.9% clean-energy, sure, but we are working on the 0.1%.

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